Woking council plans to sever ties with the Northern Irish developer behind a skyscraper venture that helped tip the tiny Surrey local authority into effective bankruptcy.
Amid ballooning costs and delays, a dramatic plunge in the value of the council’s Victoria Square development – which is 52% owned by Moyallen, a business from Dungannon, County Tyrone – is at the centre of the local authority’s financial meltdown.
Built as the tallest towers outside a major city in England – with the ambition they could be seen from the top of the Shard in central London 30 miles away – the scheme was first planned in 2013 as a £150m taxpayer-funded regeneration project, before costs more than quadrupled to £700m.
Involving a shopping centre, public plazas and a four-star Hilton hotel, the council warned last week that Victoria Square was among the main reasons for the failure of a risky investment spree overseen by its former Conservative administration, leaving the council facing a £1.2bn deficit.
Woking’s crisis comes amid intense pressure for the owners of physical retail after a collapse in footfall in the Covid pandemic and dramatic growth in online shopping, made worse in recent months by the cost of living crisis.
Ann-Marie Barker, Woking’s Liberal Democrat leader, told the Guardian that plans were being made to sever relations with Moyallen.
“The intention, always, with the relationship with Moyallen was that it was there for the development period [at Victoria Square], and that the relationship would come to a natural end at some point,” she said. “That is something we would anticipate happening.”
The details come as documents filed in the past month at Companies House show Moyallen had amassed debts worth £188m to Bank of Ireland in connection with its ownership of three other shopping centres, including another site in Woking.
Bank of Ireland placed four of Moyallen’s other operating units into administration – including two entities used to control the Peacocks Centre, a separate 1990s shopping centre adjacent to Victoria Square. Moyallen is run by the brothers Peter and John Robinson. The company did not respond to repeated requests for comment.
Those four entities are separate from Moyallen’s Victoria Square joint venture with Woking council, which continues to operate as a going concern. However, the details pose fresh questions over the suitability of the firm as the majority partner in a taxpayer-funded project costing more than the 2012 Olympic Stadium.
Documents filed at Companies House show the council was forced in the administration process to chase repayment of a £6m loan it made to Moyallen for running the Peacocks Centre, which was settled in full earlier this year. While the company operated the lease on the Peacocks shopping centre, Woking remained the freehold owner.
“We have been watching it [the administration] with some interest. There was work that had to be done by the council [to recover the £6m loan],” Barker said.
Woking’s former Conservative council leader had been warned about Moyallen’s financial position in 2018 by John Bond, an independent councillor at the time, who raised concerns that its Bank of Ireland debts posed risks to the company’s ability to continue as a going concern.
Bond, who has since retired as a councillor, said: “Everything I thought was wrong has since happened.”
“I was shouted down, literally shouted down by the Conservatives. I was very concerned [about Moyallen], but they had the backing of the senior officers.”
The council’s former Tory leadership dismissed Bond’s concerns at the time, arguing that Bank of Ireland had indicated it was supportive of the company. Bank of Ireland declined to comment.
The latest available accounts for Victoria Square Woking Ltd, the joint venture company behind the project, show the council loaned it £700m. However, the value of its assets plunged by more than £360m in 2021 to stand at just £116m – leaving the joint venture with a financial shortfall worth more than half a billion pounds.
Moyallen, which does not have a website or publicly available phone number, was paid £1.1m in development manager fees for the year.
The fresh details come as commissioners installed by Michael Gove’s levelling up department investigate Woking’s financial dealings to establish how the projects were approved and structured, with the aim of extracting the council from costly schemes and recovering money by selling assets.
Most of the council’s spending had been financed by an obscure arm of the Treasury – the Public Works Loan Board – with £1.3bn worth of borrowing that Woking could now struggle to repay.
Documents show the administration of Moyallen’s shopping centre assets is not expected to recover the full £188m owed to Bank of Ireland, after efforts to sell them were hit by the economic turmoil triggered by Liz Truss’s mini budget.
The business was forced to sell its three shopping centres as part of the Bank of Ireland administration process – including the Peacocks Centre, alongside the Magowan West and Rushmere shopping centres in Northern Ireland.
The two businesses behind the Peacocks Centre, which Moyallen had acquired in 2008 for £116m, owed the bank £88m out of its £188m debt at the time it was placed into administration by its creditors in April 2022.
Documents from the administrator Grant Thornton show a prospective buyer pulled out of a deal for the Peacocks Centre “with the specific reasons being linked to the UK’s economic instability and wider macro-economic factors … the Liz Truss mini budget occurred on 23 September 2022, followed by her resignation on 20 October – these factors most definitely had an adverse impact on our sale.”
After slashing the asking price and finding a new buyer, documents show the Peacocks Centre was sold for £15m, out of about £65m recovered overall from the Moyallen fire sale – less than half the value of the Bank of Ireland debt.
